International Journal of Supply and Operations Management

IJSOM
February 2018, Volume 5, Issue 1, pp. 101-106
ISSN-Print: 2383-1359
ISSN-Online: 2383-2525
www.ijsom.com

Importance of Supply Chain Management in Healthcare of Third World Countries

Monika Arora a, * and Yogita Gigras a

a
The North Cap University, Gurugram, India

Abstract
Healthcare Supply Chain Logistics is series of processes, workforce involved across different teams and movement of
medicines, surgical equipment, and other products as needed by healthcare professionals to do their job. The aim of
Supply Chain in Healthcare is to find the vulnerabilities among departments and propose measures to reduce them. It
aims to identify weak areas to achieve targeted health outcome and increases investments in global health. The
advantages of efficient Supply Chain in Healthcare is improved processes, efficient utilization of resources, satisfied
employees, effective treatment and happy Patients. The significance of the research paper is to analyze possible loopholes
in the healthcare and recommended controls which can be applied practically so as to bring improvement in the
healthcare. In Hospitals Integrated Supply Chain should be implemented to meet the objectives. The Supply Chain
ensures proper linkage of hospitals department, operations, and revenue cycle. The Supply Chain can be visualized as a
backend program running which is necessary to integrate all the different processes together. The supply chain
implemented ensures availability of medicine/product at right time, minimizing inventory wastage, maximizing patient
care, coordination in all departments minimizing human error/medication errors. This can be accomplished by using
possible measures i.e. integrating subsystems (Smith, Brian K, 2011), streamlining workflow and use of RFID
technologies, standard product code, Global Identification number (GIN).

Keywords: Global Identification Number (GIN); Radio Frequency Identification Number (RFID); Supply Chain
Management (SCM); Standard Product Code (SPC); In Patient Department (IPD); Out Patient Department (OPD).

1. Introduction

A pragmatic and holistic approach is used to cover all aspects of healthcare SCM as done today in different hospitals,
including consultation of various research papers, market surveys done in past, and current trends in Hospitals.
Health care is the continuous maintenance of health through the prevention, diagnosis and treatment of diseases, physical
and mental disabilities in human beings. The logistics in Healthcare constitute of Pharmaceutical products (Heinbuch,
E. Susan, 2005), medical and surgical supplies, devices, and other products as required by Healthcare Professionals like
Doctors, nurses, and admin staff. The On-Time action, Precision and Positive Results are of paramount importance in
Healthcare. The SCM should optimize efficiency and effectiveness of the treatment provided. The sharp rise of driving
costs with maintaining standards and regulation of hospitals is a tough task. As every subsystem work independently,
aligning all subsystems together is a difficult task. At present hospitals are working on identifying weak areas in which
work could be done to improve  quality  of  service  and  patient  care.  SCM’s  foremost  goal  should  be  transparency  in  all  
processes. Information flows should be centralized and reviewed/corrected on time. Visibility and clarity of information
should be maintained between manufacturer, distributor, insurance companies, providers and patients.
The Paper addresses techniques used in healthcare sector that result in efficient SCM practices. Integration and
centralization helps in consolidation of all work flows in one set of standards processes using Standard product code
(SPC) shared with all processes. The cycle of the supply chain starts with manufacturing of the medicines and medical
equipment, avoiding contamination and faulty equipment.

Corresponding author email address: monika.arora406@gmail.com

(Document type: Technical note)

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 Importance of Supply Chain Management in Healthcare of …  (Technical note)

This paper is divided into two sections covering Stakeholders and Sub-Systems of a Healthcare unit.

2. Healthcare Stakeholders

A supply chain in healthcare can be defined as the sequence of physical and technical resources required in order to
deliver a good service to patients with complete satisfaction in a cost-optimized manner. Based on the functions
stakeholders in the healthcare supply chain can be divided into four groups: Manufacturers, Purchasers, Distributors, and
Providers. Production (Figure 1). Logistics is involved in handling different operations: demand/supply management,
Production control, Operation, Inventory management, Warehouse management, Distribution and Transportation
management (Heidari-Fathian and Pasandideh, 2017). Logistics is responsible for two functions, first is of Managing
resources i.e. Capacity management (Wheelchair, Stretcher, Ambulance), Warehouse management (Medical Equipment,
Devices, Drugs), And Second is for Managing workflow i.e. Shipping, Routing (patient, wheelchair, stretcher,
ambulance).

• Medical • Wholesalers
Equipments • Retailers
• Surgical
Equipments
• Medical devices
• Pharmaceuticals
MANUFACTURERS PURCHASERS

PROVIDERS DISTRIBUTORS

• Hospitals • Wholesalers
• Pharmacies • Retailers
• Clinics

GOVERNMENT
INSURANCE REGULATORY
COMPANIES BODIES

Figure 1. Stakeholders of Healthcare system

3. Healthcare Information System

Today every Healthcare is revolving around managing assets, optimizing cost without compromising with patient
health. Different subsystems are involved in accomplishing the hospital functions. Most of the healthcare companies
are converting Unit Processes to Supply Chains so as to optimize cost and assets (Bhutta, K. S. and Huq, F, 2002).

In this paper different aspects of hospital as Medical Strategies and Service Excellence, Patient reception &
Admission, Diagnosis and Patient Treatment, Medical record Maintenance, Patient discharge and Rehabilitation
services are considered for need of Supply Chain Management (Figure 2). Hospital management have been
categorized in following categories as Check-in patients details (vital patient information), Inventory control, Billing
and collection department, Medical records, Information System (Staff, patient), Patient Information Safety (Table
1)

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 Arora and Gigras

HOSPITAL INFORMATION SYSTEM

Managerial Information
Patient Information System
System

System for OPD & IPD support System for OPD & IPD System for Patient
services Services management(PMS)

Patient care
Laboratory Infn plans
System Patient Registration

Pharmacy Infn Inventory details Patient Booking &

System Tracking

Quality control
Blood bank Infn Charging,Bill,and
System payments

Food & Beverages Medical records

Infn System

Patient information
safety

Figure 2. Hospital Information system

3.1. Pharmacy Supply Chain

The prime objective of Hospital is to provide adequate health care to Patients. It primarily needs adequate supply of high
quality medicines in Pharmacy. Supply chain management plays an important role for Hospital Pharmacy to ensure
timely availability of medicines at lowest possible purchasing cost. In supply chain, it needs different Suppliers
(Narasimhan, R., Talluri, S., and Mendez, D, 2001), Vendor agreements, floating of tenders, rounds of negotiations, and
freezing on processes of Product Delivery, as some medicines need to be transported at regulated temperatures only.

It is difficult to predict exact demand for medicines. Hence, it is important to capture accurate data on consumption of
medicines,  to  get  a  trend  of  same.  In  today’s  hospitals,  general Store keepers manage the Supply chain, but they are not
well aware of Supply Chain management principles, and hence at times, it ends up in either High Demand, Low
availability or Reverse as Low Demand but High Availability for some of the medicines, leading to increased shelf life,
and hence risk of expiry of medicines in Pharmacy (Shah, N, 2004).

3.2. Blood Bank Supply Chain

The management of Blood supply is the critical issue for Healthcare. The goal of hospital is to dynamically manage the
blood supply chain. As per study, the supply of Donor blood is irregular, so following points should be taken care:
Locations selected for blood collections, Depending on the transfusion services commodity required should be stored,
Number of regional blood bank, How supply and demand should be coordinated to meet the purpose, Transportation of
blood on demand, Delivery system be closely connected to meet the run time requirement and Blood banks should be
open 24*7 for any emergencies in hospital or near-by hospitals(Bhutta, K. S. and Huq, F, 2002).
3.3 Patient Safety Supply Chain
Research suggested that 440,000 patient’s die annually just because of preventable medical errors, and poor safety
cultures. The healthcare supply chain plays a crucial role in maintaining the valuable life and flow of business. Better
supply chain in healthcare leads to better quality of care and supports patient safety.
As many hospitals have linked the patient safety and all other processes in proper format i.e. manage the expired
medicines by automating the medicine/product tracking and identifying, accordingly taking actions so that staff and
patient are confident about treatment done. Streamline all time consuming supply chain processes to reduce the medicines
finding times, human errors, redundant processes. All the data sheet captured by doctor should be electronically captured
using RFID technology eliminating redundancy and human errors. (Acharyulu, G, 2012) All the processes should follow
supply chain transparency to gain patient satisfaction and considering human life the most important. In this section Drug
Flow Supply Chain (Figure 3), Patient Safety Practices (Figure 4).

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 Importance of Supply Chain Management in Healthcare of …  (Technical note)

Drug Flow Supply Chain

Figure 3. Drug Flow Supply Chain [2]

•Automate the product •Streamline all the •Product location should be

expiry dates workflows to eliminate
•Streamline all the work flow critical situation due to staff
dyanamically •Proper training of work flow
explaining supply chain of
the process done.
easily accessible at the time
of treatment
•Requires full supply chain
transparency

Manage expired Optimize emergency

Leverage data
medicines and workflows
analytics
equipments

• Streamline all Patients

data captured with radio
frequency identification
(RFID) tags to eliminate
crisis.
• Standarized Product
Identification

Maintain accurate
data of patient

Figure 4. Patient Safety Practices Supply Functions

The Minimum Basic Functions of Healthcare Supply Chain is summarized in table 1.

4. Conclusion

This paper identifies some of the risks that may happen in normal functioning of Hospitals due to lack of proper Supply
Chain, and where proper Supply chain management is necessary. As Hospital activities are directly related to life of a
patient. Therefore proper dissemination of information to Staff/Doctors/Patients is highly critical, which is not happening
currently due to lack of SCM.

Major benefits of SCM are as under:

1. Streamlined workflow across diff teams and people involved ( Fouad Maliki, Mustapha Anwar Brahami,
Mohammed Dahane, Zaki Sari, 2016)
2. Have tight inventory management, so as to be economically viable, and readily available in need.

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 Arora and Gigras

3. Reduce failures and monetary loss due to Faulty equipment, expired medicines etc.
4. Optimize cost of equipment/medicine, by ordering in bulk or in parts as per consumption trend, and improve
vendor management, by digitalizing all communication, tracking of consumption.

While it is important to identify and draft all SCM Process and guidelines, it is heavily dependent on Persons involved.
Hence repeated efforts shall be done to improve on:
1. Establish Safety Culture.
2. Proper communication and team work via trainings etc.
3. Adequate supervision and trained staff.
4. Advanced Equipment and Suitable environment

It is an ongoing process. There shall be a provision to have Regular Internal Review as well as Third Party Audit of EMR
(Electronic Medical Records) with proper IT Security and Access control Supply Chain Management is the SCM on
timely basis, and take corrective actions as per operations need of a particular hospital.

Table 1. Minimum Basic Functions

Function Recommended Best Practices

Pharmacy Information System Expiry of medicines should be checked on regular basis in case of manual entries.
Ensure adequate supply of medicines at all time.

Blood bank Information System Set Alarm on Min/Max count of units for each blood type
Blood should be evaluated before using to avoid crisis.

Laboratory Information System Every sample should be properly barcoded with name and patient ID. Use of
disposable syringes, sterilized & single use bottles.
Inventory Control (Narasimhan, R., Critical   Equipment’s   for   e.g.   Cardiac   monitoring   system   should   be   in   working  
Talluri, S., and Mendez, D, 2001) condition. Proper password authentication before accessing any database.

Billing and collection department Before bill generation all the department dues should be cleared. In case dues are left
it should be added in final patient bill
Should sanction the insurance from insurance company.

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